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US Inmate Tax Refund Fraud 'A Billion Dollar Problem'

by Mike Godfrey, Tax-News.com, Washington

01 December 2014


Tax refund fraud associated with prisoner Social Security Numbers (SSNs) remains a significant problem for the United States Internal Revenue Service (IRS), according to a report issued recently by the Treasury Inspector General for Tax Administration (TIGTA).

TIGTA's report is the third in a series of audits it has conducted since 2010 that have identified concerns with the growth in prisoner tax refund fraud. The number of fraudulent tax returns filed using a prisoner's SSN that were identified by the IRS increased from some 37,000 tax returns in 2007 to more than 137,000 in 2012. The refunds claimed on these tax returns increased from USD166m to USD1bn.

"Since TIGTA first began documenting this fraudulent activity four years ago, refund fraud committed by prisoners has grown to become a billion dollar problem," said J. Russell George, Treasury Inspector General for Tax Administration. "It is incumbent upon the IRS to act aggressively to prevent tax fraud wherever it occurs, particularly behind bars."

In its new report, TIGTA found that the IRS has still not yet shared fraudulent prisoner tax return information with federal or state prison officials; that the required annual prisoner fraud reports to Congress are not timely; and that IRS processes still do not ensure that all tax returns filed using a prisoner SSN are assigned a prisoner indicator, so that they can be sent through specific fraud detection filters.

TAGS: individuals | compliance | tax | tax compliance | law | Internal Revenue Service (IRS) | tax authority | United States | tax breaks | individual income tax | Tax

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